Naira Drops to N1,375/$ as Interbank FX Turnover Crashes
Increased demand for the US dollar in the Nigerian foreign exchange market (NFEM) knocked the naira down to N1,375 on Friday, according to a daily FX publication released by the Central Bank.
The naira declined by 0.23% to N1,375.46 per US dollar at the NFEM window, down from N1,372.3079 per dollar the previous day, as foreign currency demand eclipsed supply.
Exporters, foreign portfolio investors and non-bank corporate inflows, in addition to inflows from other sources, including eligible individuals, cut the demand at the bottom this week.
During today’s trading session, the spot FX rate hovered between N1377.9900 per dollar, its intraday high and N1374, its lowest rate for the day.
The naira opened the week relatively stronger at N1371 per dollar, amidst rising foreign reserves. The exchange rate weakened over the last five trading sessions in the absence of a significant supportive FX injection from the monetary authority.
The CBN report indicates that interbank FX turnover nosedived sharply on Friday, dropping by more than 46% to $62.344 million across 84 deals, down from $116.043 million reported the previous day.
Tight dollar liquidity weakened the local unit amid rising demand for foreign payments from eligible market participants. In the parallel market, the naira climbed to N1380 per dollar, reflecting divergent currency dynamics between the official and informal foreign exchange segments.
Crude oil rebounded from a 1-week low today and is sharply higher as the US-Iran peace deal remains elusive, keeping the Strait of Hormuz closed and disrupting global oil supplies.
Crude prices whipsawed lower briefly today following a Reuters report that said Qatar has sent a negotiating team to Tehran in coordination with the US to help secure a deal to end the war.
Also, Secretary of State Rubio today noted “slight progress” in the negotiations for a peace deal. However, disagreements remain for a peace deal after Reuters on Thursday reported that Iran’s Supreme Leader said enriched uranium must stay in Iran, as sending the material abroad would leave the country more vulnerable to future attacks by the US and Israel.
Geopolitical tensions are supportive for crude prices after Reuters reported Monday that Pakistan has deployed 8,000 troops, a squadron of fighter jets, and an air defense system to Saudi Arabia as part of a mutual defense pact, a deployment described as a “substantial, combat-capable force” to support Saudi Arabia if it comes under further attack. NGX Index, Market Cap Rise by N344bn as Stanbic, BUA Rally
